Atlantic City casinos increase profits in third quarter when Revel's loss is removed

Regulators released revenue and profit figures Wednesday that show two quite different Atlantic City markets.

As a group, the city’s 11 oldest casinos, increased gross operating profits by more than 2 percent to $186 million during the third quarter, according to the New Jersey Division of Gaming Enforcement. It was the fourth-consecutive quarterly increase for the group.

But include the city’s newest casino, Revel — which has been operating in the red since it opened in April — and gross operating profits actually declined by 18 percent to $150 million from the third quarter last year. That is because Revel took a gross operating loss of $37 million during the quarter, according to the division.

At the same time, Revel brought in net revenues of $62 million, which netted the industry its first quarterly revenue increase in six years. Last year’s third quarter did, however, include a three-day shutdown to due to Hurricane Irene.

Kevin DeSanctis, chief executive officer of Revel, issued a statement saying the casino was on track in attracting group and leisure business, and that it would take time to produce results.

“Since opening, we have had over 3.5 million visitors, our leisure business has been very solid, and our group business is on target,” he said. “While it always takes time, post-opening, to achieve the results we know we are capable of, we are making progress.”

Revel also announced Wednesday it was in talks with some of its investors for more capital, and was confident it could secure the funding within 45 days — a sign some observers said was a positive one for the start-up.

“They are pretty close with their lenders right now, and the investors have continued to support this,” said John Kempf, a New York-based casino analyst for RBC Capital Markets. “People view this announcement as positive.”

Unlike monthly gambling revenue reports, quarterly gross operating profits include money made from hotel stays, restaurants and other nongambling amenities. The industry draws about 30 percent of its revenue from nongambling sources.

Nongambling revenue has been growing steadily, and while it hasn’t been enough to counterbalance the loss in gambling proceeds, it has lessened the net revenue dropoff, said Tony Rodio, head of Tropicana Casino and Resort and the Casino Association of New Jersey.

“It’s another indication that things must be getting better,” he said. “We were starting to feel that we were moving in the right direction, and obviously we’re going to step it up.”

The third quarter ended with September and so does not include results from October, when casinos were closed for nearly four days due to Hurricane Sandy. That means fourth-quarter results are expected to be substantially worse, Rodio said.

“It’s not indicative of Atlantic City’s viability,” he said. “It’s indicative of a one-time event.”

Rodio said it may be months before revenue rebounds from the negative effect the storm has had on the entire industry.